What Is Basic Salary?
Basic salary is the fixed component of an employee's pay before any allowances, deductions, or overtime are added. It forms the foundation for calculating other benefits such as social insurance contributions, income tax, and end-of-service entitlements. Employers in Egypt use the basic salary as the basis for determining statutory contributions to the National Organisation for Social Insurance (NOSI).
What Is an Allowance?
Allowances are additional payments made by employers to cover specific employee needs, such as housing, transport, or medical expenses. In Egypt, allowances are commonly included in the total package and can vary significantly across industries and seniority levels. They are typically added on top of the basic salary.
What Is Overtime?
Overtime refers to the extra payment an employee receives for working beyond the standard working hours. In Egypt, the standard working week is 48 hours. Overtime is paid at 1.35x the basic hourly rate for daytime overtime and 1.7x for night shifts or work on official rest days and public holidays.
What Are Deductions?
Deductions in Egypt include social insurance contributions, income tax, and any other agreed contractual deductions such as loans or fines. Both Egyptian Nationals and expatriates working in Egypt are subject to income tax. Social insurance contributions apply to Egyptian Nationals, while expatriates may be subject to different arrangements depending on their contract and home country agreements.
What Is Social Insurance (NOSI)?
Social insurance contributions under the National Organisation for Social Insurance (NOSI) are mandatory for Egyptian Nationals. Employees contribute 11% of their gross salary, while employers contribute 18.75%. These contributions fund pension, disability, and healthcare benefits. Expatriates working in Egypt are generally not subject to NOSI contributions but are still liable for income tax.
How to Manage Payroll in the Egypt
Managing payroll in Egypt requires compliance with the Labour Law and Tax Authority regulations, including proper handling of basic salary, allowances, income tax, and social insurance. Key aspects include:
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- Adhering to Egypt Labour Law: Ensure compliance with rules regarding overtime pay, leave salary, and end-of-service entitlements.
- Calculating Income Tax Correctly: Egypt uses a progressive tax system ranging from 0% to 27.5%. Accurate tax bracket application is essential for every payroll run.
- Tracking NOSI Contributions: Mandatory for Egyptian Nationals at 11% (employee) and 18.75% (employer).
- Using a Payroll Tool: Simplify calculations for gross and net salary by automating tax brackets, allowances, and deductions.
How Much Tax Is Applied on Salary in Egypt?
Egypt applies a progressive personal income tax on salaries. Unlike many GCC countries, Egypt does levy income tax on all employees, both nationals and expatriates. The tax brackets for 2026 are as follows:
- 0% on annual income up to EGP 40,000
- 10% on income between EGP 40,001 and EGP 55,000
- 15% on income between EGP 55,001 and EGP 70,000
- 20% on income between EGP 70,001 and EGP 200,000
- 22.5% on income between EGP 200,001 and EGP 400,000
- 25% on income between EGP 400,001 and EGP 1,200,000
- 27.5% on income above EGP 1,200,000
Minimum Wage in Egypt
Egypt has a statutory minimum wage of EGP 6,000 per month for workers in the private sector, as updated under recent government directives. This applies to Egyptian Nationals. For expatriates, wages are determined by employment contracts and there is no specific minimum wage requirement. Allowances for housing, transport, and other benefits are commonly added on top of the basic salary to form the total package.
Average Net Salary in Egypt
The average net salary in Egypt varies significantly based on industry, role, and nationality. Monthly salaries for professional roles typically range between EGP 8,000 to EGP 25,000 after tax and deductions. Expatriates and senior professionals in sectors such as technology, finance, oil and gas, and multinational corporations often earn considerably more, particularly when allowances and benefits are factored into the total compensation.